Bank headquarters plan as row over investment grows

A proposed new regional bank will have its headquarters in Preston, it has emerged.

The North West Mutual – which describes itself as an “ethical” bank – has been in the pipeline for six years, but activity to get the institution off the ground has recently stepped up a gear.

It announced in January that it hoped to apply for a licence to operate later this year – and plans to begin opening the first of its expected 60 branches by the end of 2026.

The concept – which involves providing services only to individuals and small and medium-sized businesses based in the North West – has been backed since its inception by Preston City Council. The authority has ringfenced an overall £1m investment in the project, the first £250,000 of which it agreed to release in January for a share purchase.

The city council’s recent budget meeting heard that the North West Mutual will open its main office base in the city – along with its very first branch.

The details were revealed during a traditionally fiery political debate over what has become a divisive issue amongst councillors.

The ruling Labour group champions the idea behind the community bank, which revolves around ‘recycling’ money – up to an estimated £900m – within the regional economy, rather than allowing it to leak out to other places.    It is also claimed it will make banking services more accessible to those who find obtaining them difficult.

However, both the Liberal Democrat and Conservative parties have condemned what they say is a high-risk strategy with no clear benefit to locals.

With Labour faced with that accusation for the fourth budget meeting in a row, Valerie Wise, cabinet member for community wealth building, defended the authority’s continued financial commitment to the project – even after its only other council backers, Liverpool and Wirral councils, had both walked away.

“We believe in putting our money where our mouth is and we actually think [it] is really important from a Preston perspective to have the bank.

“There will be people employed in Preston…[and] we’re actually looking to see if we can find a suitable building for their head office…if we possibly can.

“This isn’t a radical proposal – you just have to look at what they do in Germany and other places,” Cllr Wise said.

She told the meeting that Preston leader Matthew Brown had approached other local authority leaders to introduce them to the bank’s recently-appointed chief executive and try to “encourage them to put their money in” – while the bank was using a financial consultant to search for backing from “institutional clients and…high net-worth individuals who have got an interest in the North West”.

Presenting the Liberal Democrats’ budget amendment – which proposed to remove the cash earmarked for the bank and reallocate it to upgrade play parks in the city – Cllr John Rutter said Labour’s plans amounted to putting “£1m of taxpayers’ money in the dustbin”.

“Preston is the only council prepared to throw away its cash in this way.  [The bank]  proposal is quite different to Animate [the new cinema complex], the Harris [refurbishment], the tram bridge [replacement], even the plan to invest in affordable housing.

“We’re not, in principle, against those [things]…when tangible assets are built in the city.  What we are against is a high-risk speculative gamble that falls far outside the remit of the city council,” Cllr Rutter said.

Lib Dem opposition group leader John Potter accused Labour of making the wrong “choices” with limited resources.

“You have made a choice that you would rather speculate on a bank than help the people of Preston with something tangible,” he said. Cllr Potter last month also questioned why customers would even be drawn to the bank when they faced a potential annual fee for having an account.

Meanwhile, the Conservatives also proposed taking the outstanding money for the bank out of the budget.

Delivering the Tories’ budget amendment, Cllr Harry Landless said the party was “against the principle” of investing in the project”, adding:  “We don’t feel comfortable with it.”

However, Cllr Brown was unmoved by the criticism of the policy – and suggested the opposition groups were overlooking the fact that councils like Preston have money “invested in banks currently”.

“This is just shifting our investment strategy towards a new bank that will create jobs and provide a service within our community,” he said.

The Labour leader added that the money was not grant funding and was “forecast to get a return”.

Meanwhile, the North West Mutual – which confirmed its Preston head office plans, at a yet-to-be-decided location, to the Local Democracy Reporting Service – has appointed Iwan Jones as its chief financial officer.

Mr. Jones has more than 30 years’ experience in financial services, having worked at Lloyds Banking Group, Barclays, NatWest, JP Morgan Chase and Deutsche Bank.

He has also been chief risk officer at Saffron Building Society, deputy financial director with Principality Building Society and most recently, financial director at Monmouthshire Building Society.